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Hospitality Leadership Through Learning
Faculty & Research

Why Customers Shop Around: A Comparison of Hotel Room Rates and Availability across Booking Channels

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Vol 5 No 2
By:  Gary M. Thompson Ph.D. and Alexandra Failmezger

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Executive Summary: As hotel chains and their would-be guests confront the plethora of electronic distribution channels, they face a complex picture of rates and availability of hotel rooms. In an attempt to sort out which channels offer consistently low room rates, this study found that chains have made considerable progress in fulfilling a stated goal of offering lowest-cost last-room availability on their own websites, in competition with sites operated by third parties. However, a check of 137 possible booking dates in four different hotel segments also revealed that the third-party providers, notably Travelocity, still frequently offer the lowest rate. The old standby of telephoning the hotel for a booking yields the lowest rate less often than does booking on the website or with a third party. However, telephoning the hotel is the most accurate channel for ascertaining room availability. The chains' websites were reasonably good at ensuring room availability, while third-party providers, notably, Expedia, often showed rooms as unavailable at a given rate, when, in fact, the room was available through other channels. The findings demonstrate the relative consistency of the chains' own websites in offering customers the lowest rate (and thereby gaining the booking), but the fact remains that customers who shop around may find even lower rates. In terms of ensuring that customers repeatedly look to book a particular chain, what makes sense for hoteliers is to maintain consistent rates across all channels, so that price becomes less of a consideration in the booking decision.

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Comments

I agree totally with the spirit and the text of the article, but would like to point that this sequence of events of "price hunting" generally happens when the traveler is going to the first world or let's say to "familiar hunting grounds".
I was responsible for hotels in South America, Central America, Africa and the Middle East. That's where the system is different, since the traveler, because of language, visas, costums, etc. does not feel so comfortable. These travelers search local contacts to make the booking at a convenient hotel for both parties (the foreign traveler and the local contact).
This issue is reflected by the amount of staff one needs to manage the local market. There are different rate structures and many times the prices offered on the net differ from the prices offered locally. I think this could be an issue to investigate further.

Manuel Garcia,
Consultant, ServusHotel

 

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About Gary M. Thompson Ph.D.

Gary M. Thompson is a professor of operations management in the School of Hotel Administration, where he teaches graduate and undergraduate courses in operations management. Previously he spent eight years on the faculty of the David Eccles School of Business at the University of Utah. He holds a BS with first class honors from the University of New Brunswick, an MBA from the University of Western Ontario, and a PhD in operations management from The Florida State University. His current research focuses on optimizing restaurant table mixes, on optimizing conference schedules to improve attendee satisfaction, on course scheduling in post-secondary and corporate training environments, and on the effects on customer service of labor staffing and scheduling decisions. His research has appeared in the Cornell Hospitality Quarterly, Decision Sciences, the Journal of Operations Management, Management Science, Naval Research Logistics, Operations Research and other journals. He has consulted for several prominent hospitality companies and is the founder and president of Thoughtimus, Inc., a small software development firm focusing on scheduling products.

For more information visit http://www.hotelschool.cornell.edu/research/facultybios/faculty.html?id=84